If your business received payments from a customer that went into liquidation 6 months later, you may open the mail one day to find a demand from that company’s liquidator asking for the money back – that’s an unfair preference claim. In 2023, two High Court decisions on unfair preference claims changed the terrain for both sides, and every credit manager and director should understand the current position.
Section 588FA of the Corporations Act 2001 (Cth) (“Act”) provides that an unfair preference is a payment or transfer made by an insolvent company to an unsecured creditor that puts that creditor in a better position than it would occupy in the winding up. Under sections 588FE and 588FF of the Act, a liquidator…